Marketplace

Doug Noland is hopeful- Doug Noland of Prudent Bear, author of the long-running Credit Bubble Bulletin weekly commentary that has foretold of the events now unfolding for many years, reflects on the future of the world and his four-month old child while Hoping There's Hope.
Wild Intraday Action- I’ve never been so happy a weekend has arrived. Before that weekend starts, let’s take a look at the 1,000 point intraday swing in the Dow and other insights from the intraday trading for October 10, 2008. $INDU 5-minute chart: Folks, a 1,019 point Dow intraday range is nothing to sneeze at - it is absolutely remarkable [...]
White Mountains Insurance (WTM) Analyst Day - Berkshire Transaction- White Mountains Insurance (WTM) held its annual analyst meeting on June 17, and I finally got around to listening to the webcast. The URL is here if you want to listen yourself.

I have written six other posts on the meeting. They are:

WTM - Introductory Comments

WTM - The Reserve Issue

WTM - Review of One Beacon

WTM - Review of White Mountains Re

Stock Market Bear/Gold Bull?-
"Solutions" from Roubini, Volcker, and Roach- Earlier today, Jim Rogers' suggested course of action to help cure what ails financial markets was made clear in this Bloomberg interview where he channeled Andrew William Mellon, the Secretary of the U.S. Treasury from 1921 to 1932.

This "liquidationist" thesis, while considered an outdated concept today, may well be the most prudent course or action given where we are now, but it would certainly be quite unpopular and politically unacceptable.

Allowing everything to come tumbling down quickly so that it can be rebuilt in a more sturdy fashion and thus minimize the total quantity of pain that is delivered just doesn't seem to be a popular idea, likely due to the sad reality that most still believe that the financial system now crumbling around us was fundamentally sound.

It wasn't - hasn't been for decades.
Gold prices getting fishier and fishier- Michael Zielinski at the logspot.com/">Mint News Blog sent me a note the other day regarding this item he recently published, an item that seems to be making the rounds on the internet over the last 24-hours and for good reason.
Michael wrote:
There’s one aspect to this entire situation that many people haven’t been discussing. The Mint is always citing “unprecedented demand” as the reason for suspensions, production halts, and allocation programs, but in 1999 gold sales were more than 4 times higher and none of these measures were necessary.
What would Jim Rogers do?- Jim Rogers was on Bloomberg this morning. When pressed for solutions to the current crisis (rather than critiques of its handling so far), he had some interesting comments.
Click to play in a new window

This discussion really strikes at the heart of the current dilemma - do you try to lessen the impact of the current meltdown in an attempt to insure you'll avoid another Great Depression, or, do you just let markets do what they want to do and then pick up the pieces and start over?
Fireside Chat: Cancel Christmas!: TFN Fireside Chat-
http://www.todaysfinancialnews.com -- The worst crash since 2001… 1987… 1937. Tomorrow morning, they may compare today's performance to 1929. What's ahead... and what's an investor to do?
FEAR IS NOT A STRATEGY- It all looks so easy on paper, but in real time, using real money, making strategic investment choices is hard. Especially during a banking crisis that threatens the broader global economy. Each January, we offer an historical chart of how...
Apocalypse Dow- “This notion that great misadventures are the work of great and devious adventurers, and the latter can and must be found if we are to be saved, is a popular one of our time. Since the search for the architect...
Devastation- Just when you thought it was safe to enter the market. Also, “what a difference a year makes.” Exactly one year ago, the S&P 500 and Dow Jones made all-time highs… one year later, we’re making fresh and significant five year lows. Let’s look at the S&P and the XLF Financial Sector on weekly charts. S&P [...]
The Two Prior 7 Day Declines in the Dow since 2000- I thought it might be helpful to look back since 2000 to show the two previous times the Dow Jones Index was down seven consecutive days in a row. The next two charts show the before, during, and aftermath of these instances for you to see for yourself. The first time it happened since 2000 was [...]
Down the rabbit hole- Hmmm... maybe I should've hung onto those gold coins...

Rex Nutting at MarketWatch had it right for about half the day today after noting the lack of central bank and government action early this morning and wondering if we'd make it until 4 PM, setting the bar ridiculously low per Dylan Ratigan of CNBC who figured, "Not down 500 is the new up."

It was a down day.

Stocks plunged late in the day sending the Dow Jones industrials down 679 points, the lowest level in five years, based largely on fears of a ratings cut for General Motors Corp. Retirement plan investors are said to be furiously exchanging their stock mutual funds for cash - that didn't help.

It's not clear where we go from here.
More hits to the Greenspan legacy- Former Fed Chairman Alan Greenspan gets both barrels from a big shotgun on the East Coast today with scathing commentaries in the New York Times and at Bloomberg, this photo from the Times piece harkening back to an era when "The Maestro" could do no wrong.
Now that the bursting housing bubble and imploding derivatives market have settled into a steady-state of extreme panic, it seems that more enlightened individuals are looking beyond "falling home prices" for a root cause of the current mess.

In this NY Times report, Peter S. Goodman reviews two decades of a "hands off" approach to Wall Street derivatives, what Warren Buffet once called "financial weapons of mass destruction".
FEAR AND VALUE: TOGETHER AGAIN- The classic conundrum in strategic investing is that relative bargains in the stock market tend to arrive when buyers go on strike. There's no mystery as to underlying cause, as current events remind. Consider our chart below, which shows month-end...
Hedge Funds Opening To New Investors- It appears that one potential opportunity has presented itself as a result of the ongoing credit crisis. Many larger investors investors who qualify for hedge fund investment, but who have previously been shut out due to their fund of choice being closed, may now have their opening (see Reuters article). Mass redemption are causing funds that previously closed their doors to open them back up. Of course, for many hedge funds this would still require you to have up to half a million dollars, and also nerves of steel given the daily developments in the market. While at a loss, hedge funds on average are still "only" down 9.41 percent, compared to the 30 percent drop in the DJIA over the same time frame. Yet a loss is a loss. Of course, even if you feel that the market has bottomed and decide to park your money in a hedge fund, the fund may not put your funds to work right away given that money is still being kept on the sidelines in order to deal with future redemption.
Market Club: Is Gold Ready to Skyrocket?- Adam Hewison of Market Club released a video analysis of Gold prices today that I wanted to share with you, as well as provide you with my own chart of daily Gold prices. Adam discusses how to use the Market Club software to identify larger trend then drill down to the smaller time frame for trade [...]
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KINDER & ENTERPRISE HAVE SPOKEN
NOW WHERE R THE REST OF YOU?
RATE CUTS WILL HELP, BUT ONLY MARGINALLY- The Federal Reserve and other central banks around the world cut interest rates this morning for reasons that are obvious to everyone. Normally, we'd criticize the cut, given the sea of liquidity already flowing from the world's central banks. But...
A coordinated global rate cut- Well, you could see this one coming and, after an initial lackluster response, it looks like equity markets have gotten the message. In a coordinated action, banks in the U.S., Europe, U.K., Canada, Sweden, Switzerland, and China cut short-term lending rates this morning. This is what it looks like in the U.S. with the Fed funds rate now at 1.5 percent.
Here's a summary of the before and after lending rates:
- US: from 2.0% to 1.5%
- ECB: from 4.25% to 3.75%
- BOE: from 5.0% to 4.5%
- Canada: from 3.0% to 2.5%
- Sweden: from 4.75% to 4.25%
- Switzerland: from 3.0% to 2.5%
- U.S. mint halts gold coin production/sales- There have been a number of reports over the last 24-hours about the U.S. Mint halting the production and/or sale of gold coins. There doesn't appear to be anything available at the U.S. Mint website at the moment - in the past, they've been rather slow to make formal announcements.
  
  Here's what appeared yesterday at Reuters:
  US Mint halts some American Eagle coin production
  Tue Oct 7, 2008 10:14am EDT
  By Frank Tang
- Where do you go from here?- You have to wonder what's going through the minds of central bankers around the world these days as their remedies do not seem to be having the desired effect.
  U.S. markets are bravely trying to lead an advance out of the morass, but conviction is lacking (that is, with the exception of the gold market and mining stocks).
  
  The report in the Telegraph from which the picture above was culled tells of the difficulty encountered across the pond after bold announcements from the government.
  
  After a volatile day of trading, stock prices ended the day markedly lower in the U.K., the FTSE recovering almost two percent from its lows but still managing to lose another five percent on the day.
- A Conceptual Framework for Volatility Events-
  I developed a framework to aid in thinking about volatility events awhile back and given the recent volatility, I thought it might be helpful to share that framework.
  
  First, there are many different types of events that affect volatility. Some of these events transpire almost instantaneously according to an exact timetable that is known in advance, even if the facts are a surprise. Examples of exact-instantaneous volatility events include government economic data (e.g., tomorrow’s weekly jobless claims), corporate earnings announcements (e.g., Chevron (CVX) reports tomorrow), and yesterday's speech by Ben Bernanks. Other events unfold incrementally on a fuzzy timetable, with any number of twists and turns. Examples of fuzzy-incremental events include hurricanes (Gustav, Hanna, etc.), geopolitical crises (Georgia/South Ossetia, Iran, Iraq, etc.), and of course, the current financial crisis.
- SP 500 Tests Major Monthly Moving Average- With all the rampant volatility of the last few days, it’s easly to lose focus on the larger structure. Tuesday, the S&P 500 tested its 200 month moving average - Wednesday, it broke it. Let’s view the monthly S&P 500 and Dow Jones Index charts. S&P 500 Monthly: After price violated the 50 month EMA to the [...]
- - BLOOD IN THE MLP STREETS!
  
  Down 15% in about 2 hours of trading. The index has now down more than 60% off its highs and its down nearly 33% just since September 1st. Down 25 points to 152. Cheniere Energy Partners(CQP)is up 42 cents for some unknown reason but that is it.
- Why the Multi-Day Market Crash?- We have experienced a market crash. It did not occur in one day, as in 1987. Instead, it took a few weeks. We would call it a slow-motion crash, but it seemed to happen quickly and relentlessly. Analysis is needed.The...
- U.S. rate cuts not so "stealthy" anymore- Let's see, they cut rates by a full point in Australia this morning and both the ECB and the BOE are believed to have twitchy trigger fingers at the moment. In the U.S., it looks like rates have already been slashed, they just haven't announced it yet.
  Last Thursday, the "effective" Fed funds rate dipped more than a full percentage point below its target to 0.67 percent and with reports like this one from Bloomberg, lower short-term rates in the U.S. aren't such a big secret anymore.
  The Federal Reserve may have trimmed borrowing costs yesterday without actually saying so.
- Dealing with budget problems in different ways- Tales of woe are collecting in the mainstream media at an alarming rate. Once wealthy families along with state and local governments are all grappling with being less wealthy after the housing market, stock market, and many other markets have headed south.
  
  In some ways, you can't blame people for spending beyond their means - it had become conventional wisdom to do so and, in many cases, those who didn't were shunned or made to feel foolish and old fashioned by those who did.
  
  After living large in California for many years during the housing bubble, things have changed dramatically in the Golden State. The sham of a budget that was just passed 90-days late is already dripping red ink as detailed in this report in the LA Times.
  Emergency session may be needed as budget plunges into the red
- Stock market to Bernanke: "Hinting is not enough"- While waiting in line at the bank earlier today to visit our safe deposit box, reading in the Wall Street Journal about how yesterday wasn't a "capitulation day" and that too many investors are still looking for a bottom rather than abandoning hope altogether, I couldn't help overhear some rather desperate sounding conversations between bank officials and customers about one thing or another, invariably having to do with money and/or credit, usually the lack thereof.
  
  There seemed to be more desperation in the voice of the customers than the bankers, but it was a close call.
- We're getting less wealthy ... again- It's not clear if or how the world's equity investors are going to recover from the current downward spiral that is the global stock market, but we're about to find out. Millions and millions of quarterly statements are hitting mailboxes as this is written and the important question is, "How many of the recipients will take action as a result of the numbers that appear in those statements?"
  
  Remember it's not really a loss unless you sell.
  
  This report puts a neat price tag on the damage that has been done recently to the investment accounts and retirement dreams of many. The last time that stocks plunged like this, home prices were going up so fast that, unless you had stock options in an internet start-up, you probably didn't take too big of a hit to your overall bottom line.
  
  This time it's quite a different sensation.
  Retirement accounts have lost $2 trillion
- VXO Chart from 1987-1988 and Explanation of VIX vs. VXO-
  In the past, I have gone to some length to differentiate between the VIX and the VXO, but given all the confusion I have seen in the media over new VIX records, I think it is time to offer up some history that may help clarify the situation.
  
  A good place to start, frankly, is with a prior post that I titled Ten Things Everyone Should Know About the VIX. For the visual learners out there, I have reduced the history of the VIX and the VXO to a graphical timeline below. Here are some of the important facts in a nutshell:
- More Regulation On The Way- The Financial Services Authority (FSA) in the UK is planning to conduct a "significant reappraisal" on how banks use securitization to free-up capital (see Financial Times article) given that mortgage bonds and other asset-backed securities are becoming more complicated than originally believed. This is important for US investors given that the FSA is the leading voice on the Basel Committee. Adjustment beyond current Basel II regulations and guidelines are already being discussed with regard to raising bank capital requirements. The problem is that as new products are developed, it is difficult to know exactly what risk are being created for all counterparties. Since the risk is often managed at the point of origination, or sold off, there has at times been less interest in formally quantifying the risk, leaving counterparties on the other side with a product that is less understood than others in terms of market and credit risk exposure.
- Interesting Developments in Potash POT- Potash (POT) was a highly watched, profitable stock from 2007 to mid-2008. However, as the commodity markets began falling sharply, so did shares of Potash, destroying profits and sending prices plunging from $240 to $80 in four months. Let’s see these developments on the Weekly chart as well as potential support both from the weekly [...]
- Whom Should We Trust?- There is an argument making the rounds. The first incarnation was in opposition to the Paulson Plan. It has morphed into a question about whether the plan -- and other measures -- will work.At "A Dash" we did not take...
- WHAT HAVE WE LEARNED?- The rolling crisis that has become the daily routine of late has no obvious and immediate solution, but at least we can be clear about how we arrived in this thankless position. And maybe, just maybe, we can learn a...
- We're not going over a cliff with a 2 percent Fed funds rate- Or are we? Those words were spoken by Robert Dye, a senior economist at PNC Financial Services Group in Pittsburgh, Pennsylvania in this story at Bloomberg today and it probably captures the sentiment of most stock investors.
  
  Cut rates! What harm could it do?
  
  A half-point cut to short-term rates would certainly give equity markets at least a temporary boost and the whole idea of remaining vigilant against inflation is, quite frankly, starting to look kind of silly with commodity prices tumbling and home prices in free-fall.
  
  Oh, that's right, home prices aren't included in the government's misguided measure of "inflation" and food and energy are stripped from the economists' preferred gauge of consumer prices, both of these errors sure to go down in the economic history books as being much more grave in retrospect than in real-time.
- No, we need to fix the money. Literally.- Yes, there's a reason there are still so many Ron Paul for President signs up in peoples' front yards even though the Texas Republican long ago gave up his bid for the Presidential nomination.
  
  A small but growing number of individuals in this country are beginning to understand the fundamental problem the nation faces in grappling with a financial system that seems to have run amok once again and, not surprisingly, is being treated with the same palliatives as the last time it ran amok, which, of course, is what got us into the current mess.
  
  It's good to see items like this Wall Street Journal op-ed from last week (a piece that seems to have a renewed life on the internet this week) as it is a sure sign that more and more people are starting to understand the real root cause of the current crisis which is certainly not falling home prices.
  
  See, there it is - right there in the title.
- A Little Elliott Wave Into the Close- Just when you thought the trading day couldn’t get any weirder… price gaps down strongly (and likely unexpectedly) in the morning, forms a trend day virtually all trading day long, and then destroys the trend-day down structure into the close. Let’s look at the intraday 5-minute structure and the sneaky Elliott Wave pattern that formed [...]
- SP500 Damage Done on Monthly Chart- Today’s equity decline undersay has stunning ramifications for the larger time-frame structure of the S&P 500 and other US Equity Indexes - we’re now at levels not seen since 2003. Let’s take a quick look at this structure to see where this takes us. S&P 500 Monthly Chart: First, let me state that we’ve now officially ‘blown [...]
- One-Minute Elliott Wave Example on today’s DIA- I know - probably the last thing you want to read on a day when the US Equity Indexes are down over 5% is an example of the Elliott Wave Theory applied to a one-minute chart of the DIA, but sometimes it helps to envision structure in an environment of perceived chaos and randomness. If [...]
- Death of Capitalism?: TFN Amberger Smackdown 10/01/2008-
  http://www.todaysfinancialnews.com -- Smug Europeans are gleefully rubbing their hands as Americas financial industry hits rock bottom. But the Schadenfreude may be short-lived.
- What to do when markets crash: 60 Second Buzz 10/01/2008-
  http://www.todaysfinancialnews.com -- Despite last-minute political maneuvering, global stock markets are crashing. What is an investor to do? Run for cover -- or load up on bargain?
- PLENTY OF BLAME TO GO AROUND- The finger pointing has only just begun, and there's lots of targets to point at. Analzying what went wrong on Wall Street is clearly in everyone's best interest if only to prevent trouble in the future. But the greatest danger...
- Martin Feldstein lays an egg- Well, on a positive note, at least Martin Feldstein didn't use the words "root" and "cause" right next to each other when laying this egg of an op-ed piece in yesterday's Wall Street Journal aimed at helping solve the credit crisis.
  
  His plan?
  
  In order to make underwater homeowners less likely to walk away from their properties, reduce their outstanding mortgage balance by 20 percent, and give them a government loan for that amount in its place.
  
  This thinking is apparently based on the assumption that your typical American homeowner can't do simple addition.
  The Problem Is Still Falling House Prices
  The bailout bill doesn't get at the root of the credit crunch.
  By MARTIN FELDSTEIN
- The week's economic reports- The worst labor report in more than five years and the sharpest decline in manufacturing activity since 9/11 highlighted the week's economic reports.
  
  Stocks and bonds ended with the S&P 500 Index down 9.4 percent to 1,099 (for a year-to-date total return of -23.3 percent) and the yield of the 10-year U.S. Treasury note fell 19 basis points to 3.64 percent.
  Personal Income and Spending: Incomes rose but spending was flat in August - good news for workers but bad news for the economy. Personal income rose 0.5 percent in August, a big rebound from the upwardly revised decline of -0.6 percent in July. On a year-over-year basis, personal income is now up 4.6 percent while overall PCE inflation is up 4.5 percent, producing meager wage gains in inflation-adjusted terms.
- Merkel guarantees the money- The BBC is reporting that the German government has now guaranteed all private savings accounts as they continue to try to find a way to salvage their second largest commercial property bank Hypo Real Estate after a previous rescue attempt failed.
  
  Chancellor Angela Merkel is shown to the right pointing at the piles and piles of money that will be handed out to Hypo depositors on Monday morning.
  
  This follows action by the Irish and Greek in recent days to guarantee savings deposits, actions that have been greeted with scorn by other European nations, up until the time that they take similar actions themselves.
  
  From the BBC:
- US Dollar Index Makes Fresh 2008 Highs- The US Dollar Index made fresh 2008 highs on Friday, but only marginally so. Let’s look at the daily chart as well as the longer term monthly chart for potential clues to the future. Also, Adam Hewison of Market Club recently released a two-part video series entitled “The Past and Present of the US Dollar Index [...]
- Critics of the BLS Birth/Death Adjustment Proven Wrong- The actual job count is in. It shows whether the much-maligned birth/death adjustment improved the monthly job count, as the expert BLS team contended, or whether they government was creating "fictional jobs" as maintained by the many vociferous critics.Result? A...
- The best way to play volatility:TFN Smart Trading 10/01/2008-
  http://www.todaysfinancialnews.com -- Karim Rahemtulla has a winning play for those weary of stock fluctuations.
- Recession Investing Secrets: TFN Market Insights 10/01/2008-
  http://www.todaysfinancialnews.com -- With the markets in constant flux, government bailouts supporting Wall Street, and threats of a major economic slowdown, are bonds a better investment than stocks?
- Buy this wealth-building engine: Hot Stock Pick of the ...-
  http://www.todaysfinancialnews.com -- Market upheaval and turmoil in the banking industry has created an incredible opportunity for investors with cash and a long-term wealth-building perspective.
- Hedge Funds May Be Driving The Market Selloff, But Not Because They Are Shorting- In a surprising turn of events (for some), the market sold off Monday on news that the TARP bill failed, and again today on the news that the bill passed, even with the ban on financial stocks still in place and extended for another few weeks (see WSJ article here). How could this happen? Isn't the short-selling ban suppose to put a floor on the market? Of course not, but the current sell-off of the market at a time when a ban on short selling exists for over 1,000 stocks illustrates in part how current portfolio positions are still being reduced.
- Hey, Who Stole My Rally?!- On Monday, the US House of Representatives rejected the “Bail-out/Recovery” Bill narrowly, sending the Dow Jones plunging, closing down 777 points. Today, hours ago, the House passed the Bill by a comfortable margin. Did the Dow rally like virtually everyone expected? No - it fell almost 500 points from its intraday high. It almost makes [...]
- Two Recent Elliott Wave Impulse Examples- I previously posted the “Three Hard and Fast Rules of Elliott Wave Theory” and now it’s time to see these simple rules in action on two stocks on different time frames. First, let’s review those rules: 1. Wave #2 Cannot Retrace 100% of Wave #1 2. Wave #3 Cannot be the Shortest Wave (but does not have to [...]
- Job losses now at recession levels- The Labor Department reported nonfarm payrolls fell by 159,000 in September, the sharpest decline since March of 2003, and unemployment held steady at 6.1 percent.
  This marks the ninth consecutive month of job losses with a total year-to-date decline of 760,000, a number that is sure to be revised much lower after the annual benchmark revisions are performed.
- The Gubernator writes a letter- The LA Times reports California Governor Arnold Schwarzeneggar wrote a letter to Treasury Secretary Hank Paulson yesterday commending him on his efforts to bail out the global economy but warning that the nation's largest state might need a bailout too if the credit crisis goes on much longer.
  
  The governor is in the middle of a painful learning process about how it's much, much easier to govern when you have a housing bubble, rather than a housing bust. Here's the letter(.pdf) with a nice, bold signature at the end.
  California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.
- Let’s get seized-up banking back on track- "... there is plenty of room for differing opinions. But there is precious little time to continue analyzing and comparing these opinions. Action is needed, and in this case what is arguably imperfect action is preferable to inaction in search of perfection," said guest contributor Rob Fraim about the government’s bailout plan. "Enough talk. Enough politicking. Let's get it done, let's get it working, let's get it back on track."
- Global liquidity crisis: What now?- This post considers the likelihood of three possible outcomes of the bail-out plan and its effect on the global economy, financial markets and currencies.
- The Three Hard Rules of Elliott Wave Theory- Despite how difficult Elliott Wave Theory seems - and it’s certainly not easy to interpret possible wave counts - there are really only three solid, objective rules that your wave count must follow - the rest is mere guidelines. What are these three main rules you ask? Let me preface by saying that Elliott proclaimed that [...]
- One of the root causes of the financial crisis- For all the talk about identifying root cause lately, as the financial crisis lurches to-and-fro like a drunken sailor stumbling back to his room after a night out on the town, there is a dearth of discussion about one of the most important of the lot - the inflation statistics.As shown above, if home prices were included in the inflation data instead of the nefarious OER (owners' equivalent rent), we'd see that "core inflation" is now settling in at about minus 4 percent and that today's short-term interest rates of two percent in the U.S. are quite inappropriate.
  
  Of course the "inappropriate" label could be just as easily applied to the 2003-2004 period when rates were at one percent - that's when the seeds of this crisis were sown.
  
  The BLS has a new webpage up defending their methodology (see item #2 for OER):
- Live blogging the Roubini / Ritholtz Credit Crisis Webcast- I've never done this before ... here goes (all times are EST). For conference details see this item at The Big Picture.
  
  5:05 - Already pretty far behind. Nouriel says it's not a choice of a V-type or U-type recession. It's a question of whether it will be a U-type or a L-type recession (think Japan). Nouriel thinks the Fed will cut rates next (I could have told you that).
  
  5:12 - We're about eight minutes in and Barry's just drinking coffee so far.
  
  5:15 - He just scratched his head and now he's shuffling his papers.
- gold: the pros and cons-
- Intraday Ascending Triangle Example in DIA- On Wednesday, the Dow Jones ETF - the DIA - gave us a good example of an ascending triangle… that brokeout in the opposite direction as expected. Let’s examine it and learn from its development. 5-Minute Chart DIA: Generally, an Ascending Triangle is a continuation pattern and has an upwards break-out bias, as strength is thought to [...]
- Market Prospects: Bailout Vote- It has been a busy time for all of us managing investments.The events of this week hit two subjects where we have some special expertise. That does not mean, of course, that we will be correct, but our odds are...
- Armageddon outta here !- “Last night, Mr Brown made it clear he was ready to increase the level at which savers’ deposits were guaranteed from £35,000 to £50,000 but indicated he did not want to act until the markets had calmed.” – From The...
- Wealthy Investors Looking To Change Advisors- It looks like the market sell-off is causing wealthy investors to start getting a little nervous (see a recent Wealth Report blog post). A new survey by Prince and Associates has found that 81 percent of investors with over $1 million of assets available for investment plan to take some of their assets away from their current advisor, with 86 percent recommending that other investors do the same. Just 2 percent plan to recommend their firm to others. The larger brokerages and banks appear to be taking the lion's share of the blame, with 90 percent of clients with large brand firms planning to move money away from their current advisor, with 70 percent moving all assets. Only 29 percent of investors with smaller firms (with more personalized service) plan to withdraw funds. Of course, this always begs the question: "What do you then do with the money?" More than likely it will just move to another advisor, although smaller firms may see a net increase in accounts and funds.
- Picking A Number When Marking-to-Market- The SEC is reminding financial services firms that they don't have to use fire sale prices when evaluating hard to price assets (see Reuters article). In making the clarification, the SEC reaffirmed that management's internal assumptions can be used to measure fair value when relevant market evidence is not available, and that "distressed or forced liquidation sales are not orderly transactions." Now, instead of relying on fire sale prices, companies can go back to marking-to-model, even when the inputs to models that are based on observable factors are no longer being observed. The greater use of assumptions for valuation has caused a former SEC accountant to state that the SEC directive could be titled "pick a number, any number" in how it gives banks too much leeway in choosing numbers for valuation. Other opponents also feel such steps just reduced the transparency of the real risk facing institutions.
- Roller Coaster Market- The only way I can describe the recent stock market activity is that of a wild “Roller Coaster” ride. Up, down sharply, up again, down again - nauseating, but fun if you like the wild swings (or have short-term strategies to take advantage of them). Let’s take a closer look at the S&P 500 to [...]
- Gap Fade Stats for September- What a month September was for the Market. It lived up to its reputation as a weak month historically. So, how did the gap-fade tactic work in the Month of September? How many overnight gaps occurred in the Dow (DIA) and how many of those filled? It’s time to take a look as a new [...]
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  AN END TO A HIDEOUS QUARTER
  
  From 270 to 225 on the MLP or over 20% down for the quarter and actually just about all of that drop came during September. It is the worst drop for mlps possibly ever seen. I can't find a stretch anywhere on the long term chart that equates to the crash we've seen in this group during the last quarter. September 2008 was certainly a blood curdling for us. And now here we go with a new month, new quarter, and the financial world continues to spin out of control.
- An interview with Alan Greenspan- [This was originally published about a year ago - it's worth another look...]
  
  After repeated requests, at great personal expense, and after a series of logistical obstacles were somehow miraculously overcome, former Federal Reserve Chairman Alan Greenspan and I sat down for an interview the other day.
  
  Tim Iacono: Good afternoon.
  
  Alan Greenspan: Good afternoon. My assistant tells me you've been writing about me.
  
  Iacono: A little. Let's get right to the point. Are you responsible for the housing bubble?
  
  Greenspan: No.
  
  Iacono: Would you care to elaborate on that?
- The Revised Troubled Asset Relief Plan Should Have Passed- When the Treasury came out with its $750 bailout plan on September 22, I thought it lacked so many necessary ingredients that it deserved a thumbs down. (Many others had similar objections, including George Soros.) But in the negotiations between the Treasury and Congressional leaders over the course of last week, most of the missing ingredients [...]
- How to Make TARP Politically Acceptable: Add a Tax on Securities Transactions- I propose that the Congressional leadership re-introduce the Trouble Asset Relief Program accompanied by a major new policy: a small tax on securities market transactions. This will accomplish the political goal of aiming a silver bullet into the heart of the (understandable) popular outrage that blocked passage of the TARP bill on Monday. It will [...]
- Bail-out Plan: Will it Work, and How Will Markets React?- Greetings from London where I am spending a few days on a business visit. Economic doom and gloom prevail in this neck of the woods, but the real focus is on the US government's bail-out plan. This post is a guest contribution from the economists at Morgan Stanley, providing food for thought on the chances of the plan being successful and its likely impact on financial markets. Remember to also post your views on this topic in the comments section of the blog site.
- Bill King’s Bail-out Plan- Still on the topic of the bail-out plan, guest contributor Bill King (The King Report) offers his ideas on how to put a more credible plan together. His thoughts are insightful and deserve the attention of the powers that be. Please keep those comments and related links coming as this saga unfolds.
- Words from the (investment) wise for the week that was (September 22 – 28, 2008)- As I am travelling at the moment, this week’s edition of "Words from the Wise" does not provide the customary review of the financial markets' movements and economic statistics. Given time constraints, today I will only share with you a number of video clips in lieu of excerpts from news items and quotes from market commentators. Please feel free to post all your must-read links from the past week in the comments section, i.e. creating a DIY round-up so as to speak.
- Uncle Sam, the Enabler – Memo Found in the Street- Barry Ritholtz has put pen to paper to write a memo "from Wall Street to Washington, D.C.", spelling out in no uncertain terms the role that Uncle Sam played in enabling the current financial mess.
- The New Biggest Risk of All – DEFLATION- "It seems like a foregone conclusion that deflationary pressures are now squarely upon us. Prices are falling in asset classes across the board," said guest contributor Bennet Sedaca. "I have focused on credit for years but now turn to the next threat I believe is on the horizon. Deflation." This is a sobering post to be sure, but a concept deserving our serious attention.
- Fear grips global markets- The first ever trillion-dollar loss on Wall Street came in the wake of US lawmakers failing to gather enough votes to pass the $700 billion bail-out package. This post deals with a few interesting snippets and concludes that we are still in the grips of a primary bear market and should tread carefully until the smoke clears and the flames can be measured.
- Economist cover – a bearish climax?- Eoin Treacy of Fullermoney points out that if any further evidence of a bearish climax was needed, one should look no further than the poignant cover of the most recent Economist. He also shares his views on how he sees stock markets unfolding.
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